December 3, 2002

How can hiring a new associate or partner be detrimental to the firm? When hiring a new attorney, law firms should take in consideration the impact the new hire will have on its professional liability insurance. A common mistake made by law firms is to overlook the liabilities that accompany new partners and new hires.

For example, having an attorney who has had claims filed against him or her may impact the way the firm's current carrier underwrites the risk at renewal. Although the claim has nothing to do with your firm it becomes part of your application and therefore potentially impacting the carriers pricing.

Another issue is the practice specialty of the new attorney. How will this area of practice, if new to the firm, be perceived by your carrier? Undesirable practice areas can mean higher premiums or even a non-renewal.

How do you target potential problems and avoid claims?

When seeking new employees, make sure to carefully evaluate new prospects through the following:

Ask all prospects to list all claims made against their practices in the past. Another suggestion is to ask them hire to sign a declaration of whether they have knowledge of any incidents that may perpetuate a claim. The firm should then ensure that prior coverage is in place for those incidents.

Check prospects' background using their resumes as well as personal references. Look for obvious problems and characteristics that are not in line with the standards of your firm or practice.

Interview colleagues, including fellow attorneys and support staff with whom the prospective employee has worked. This will help you to obtain an inner view of the new hire's work ethic and standards.

Communicate the firm's expectations regarding reporting structure, participation in management, professional growth, compensation and pro bono work, as well as the firm's philosophy on new client development.

Lastly, compile a written synopsis of all-potential liability risks the prospect would possibly bring to your firm, based on the information gathered in the aforementioned steps. The synopsis should then be presented to all principals or partners in your firm to review since they will share the risks.

Although the prospect of additional revenue or the ability to expand one practice are can be very attractive -- remember it may come at a price as respect to professional liability insurance.

Ahern, RPLU, is the president of Ahern Insurance Brokerage. He can be contacted at brian.ahern@sddt.com.